SMEs are questioning just how effective the government’s proposed crackdown on the black economy will be, and queried how legal tender can be made illegal to use.
As part of its 2018 budget measures to boost revenues and reduce the proceeds of crime, the government unveiled measures it hoped would take money from lawbreakers rather than honest taxpayers.
Those measures, according to The Tax Institute, boil down to three key points: a ban on cash payments over $10,000; an expansion of the Taxable Payments Reporting System to include contractors; and denying deductions for cash payments to employees where PAYG could have been used or to contractors an ABN is not provided.
“It is expected that the government’s revenue bottom line will be better off by $3 billion over the forward estimates period and there will be an extra $2.5 billion in underlying cash receipts,” the institute’s senior tax counsel, Professor Bob Deutsch, said.
“These numbers suggest some robust enforcement from the ATO is coming to the black economy. Taxpayers need to ensure they are fully compliant with the law or they may find themselves entangled in these enforcement strategies.”
My Business readers were less enthusiastic about the measures, however.
“How odd! I guess some our clients will just have to pay over a number of days,” said one.
“As long as I am doing the right thing, it is too hard for me to police what our clients are doing. I can't have our staff keep track of how they make their payments and keep a running tally of cash, so I am guessing it is individual payments only and hence easy for people to just pay over a number of days.”
Another lamented that “it is amusing that paying with the legal tender of the Commonwealth is not to be acceptable”.
“But what if the creditor insists on his legal right to be paid in cash? Some foreigners don't trust banks — with good reason.”
The issue of bank trust is particularly pertinent given the ongoing royal commission into misconduct by the financial industry, which will hear from SMEs in its stage of hearings later this month.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.